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ADR Network Sees Benefits from Economies of Scale

ADR Network Sees Benefits from Economies of Scale

ADR Network anticipates further consolidation in the agency driver market following sustained pressure on margins, the impact of recent legislation and sustained shortages of Class 1 drivers.

Commenting on the issues faced by the sector ADR Network MD Andrew Waldron said: “We have recently been picking up new work on the back of smaller agencies that are struggling to make a profit or are unable to meet the operational demands being placed on them. In the last week alone in the North West we have been asked to cover an extra 500 shifts per week.”

At a recent ADR Network conference the business has a forecasted lift in turnover for the coming financial year of 45%. However, that growth will only result in an estimated 10% lift in profit.

ADR Network anticipates a market with a few large players, some niche local firms with very low overheads, with the middle ground being squeezed with neither the economies of scale to compete or the reduced overheads available to smaller players.

These projections are largely in line with the Recruitment & Employment Confederation’s (REC) recent Industry Trends Survey that showed that the recruitment industry grew by 4.3% in the year to April 2012, yet the total number of recruitment industry businesses dropped by 11%.

Waldron Continued: “We will see some growth in our core business but we will also be focusing on making direct strategic moves to address the driver shortage issue. This will see us opening a series of driver training centres across the UK in 2013. We will target class 2 drivers and will be offering them a permanent contract when they successfully complete their training. Our clients are acutely aware of the driver shortage issue and are discussing ways in which we can work together to begin to tackle this problem.

By focusing on the driver supply issue we will further strengthen our strategic position within the sector and provide ourselves with a platform for further expansion.”

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